A perfectly competitive firm is producing 50 units of output and selling at the market price of $23. the firm's average total cost is $20. Total cost of the firm is $1000.
Total cost is the sum of all expenses incurred to produce an output of any kind. From an accounting standpoint, financial reporting, where overhead costs must be allocated to specific assets, is where the total cost approach is more useful.
Total cost, in economics, is the total expense a company incurs to produce a particular level of production. It is often expressed as the sum of all costs that are both fixed (such as the cost of a building lease and the cost of large machinery) and variable (such as the cost of labour and raw materials), which change depending on the level of output.
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